Laserfiche WebLink
REQUEST FOR ACTION <br />TO <br />ITEM NUMBER <br />City Council and Utilities Commission <br />6.1. <br />AGENDA SECTION <br />MEETING DATE <br />PREPARED BY <br />joint Meeting <br />March 7, 2011 <br />Troy Adams, P.E. — ERMU Director <br />of Operations <br />ITEM DESCRIPTION <br />REVIEWED By <br />Elk River Municipal Utilities' CAPX2020 Brooking -Twin Cities <br />Lori Johnson, City Administrator <br />Transmission Project Investment Options <br />REVIEWED BY <br />ACTION REQUESTED <br />Review of option for Elk River Municipal Utilities (ERMU) to increase investment allocation into <br />CAPX2020 Brookings -Twin Cities Transmission Project with Midwest Municipal Transmission Group <br />(MMTG) through Central Minnesota Municipal Power Agency ( CMMPA). Decision to increase <br />allocation requires Utilities Commission approval and City Council approval per CMMPA bonding <br />requirements. Decision to increase allocation to be made at the March 14`'' joint City Council and <br />Utilities Commission meeting. Representatives from CMMPA will be at the March 7"' and March 14'h <br />joint City Council and Utilities Commission meetings. <br />BACKGROUND /DISCUSSION <br />In May 2006, the Utilities Commission authorized joining MMTG to explore the potential to obtain <br />ownership in the transmission system. In February 2007, ERMU entered into an agreement to participate <br />through CMMPA in the CAPX2020 Brooking -Twin Cities Transmission Project. This represents <br />ERMU's direction to own instead of rent. <br />In mid February, CMMPA received notice that the Federal Energy Regulatory Commission (FERC) <br />awarded all the incentives that were pending. Representatives from CMMPA will be able to elaborate on <br />the impact of this ruling on this project. <br />FINANCIAL IMPACT <br />One of the questions that had been raised by staff was the impact of the project bonding on the City and <br />Utilities. The bond counsel for CMMPA on this project, Virginia Rutledge of Public Financial <br />Management, provided a teleconference discussion on the impact of the debt issuance of municipal <br />general obligation bonds and municipal utility bonds issued with electric revenue as the source for debt <br />service. According to CMMPA bond counsel, the CMMPA bonding related to this project will not <br />impact a City's bond rating or ability to issue municipal general obligation bonds. This bonding will not <br />affect the ability for the municipal utility to issue revenue bonds. Also, the bonding associated with this <br />project will not require the municipal utility (through bond covenants) to have reserves dedicated to this <br />bonding. <br />